CFTC fails to show Corzine didn't supervise MF Global, ex-CEO says

Carlyn Kolker

2 Min Read

Former MF Global CEO Jon Corzine testifies before a House Financial Services Committee Oversight and Investigations Subcommittee hearing on the collapse of MF Global, at the U.S. Capitol in Washington, December 15, 2011. REUTERS/Jonathan Ernst

NEW YORK (Reuters) - The Commodity Futures Trading Commission’s lawsuit against former MF Global chief executive Jon Corzine should be dismissed because it fails to show that he didn’t properly oversee the failed brokerage firm, Corzine said in newly filed court documents.

Corzine was charged in June by the CFTC with violating his legal obligations to diligently supervise employees and not acting in good faith as a “control person” at the futures brokerage firm.

MF Global collapsed in October 2011 following aggressive bets on sovereign debt, thin capitalization and questionable disclosures to investors. More than $1.6 billion was discovered missing from customers’ accounts, something explicitly prohibited under futures regulation.

MF Global settled with the commodities regulator, agreeing to pay $100 million as well as to compensate customers for any money owed to them.

In Corzine’s filing in federal district court in New York, the former CEO, who once served as governor of New Jersey and a U.S. senator, said that as the head of the brokerage firm he was responsible for delegating authority to others and was not involved in directly supervising employees who may have been responsible for the missing customer funds.

“The CFTC’s factual allegations show that Mr. Corzine was not responsible for supervising the individuals who were involved in the transfers of customer funds or the specific transactions at issue, much less that he failed to supervise them,” Corzine wrote.

Former MF Global Assistant Treasurer Edith O‘Brien, who was also charged by the CFTC along with Corzine, also asked U.S. District Judge Victor Marrero on Tuesday to dismiss the CFTC’s complaint.

A spokesperson for the CFTC could not be reached for comment after regular business hours.

The case is Virginia Retirement System et al. v. Jon S. Corzine, No. 11cv07866, U.S. District Court for the Southern District of New York.